I am pulling my hair out trying to figure this out because I had it working until last week and somehow it broke.
When I setup a virtualenv for a Google App Engine app
Google AppEngine SDK makes a lot of trick in order to pull its install into sys.path, and these tricks rely on actual file's path. I think there might be a lot of various reasons why it fails. SDK doesn't install itself as a real python package, virtualenv doesn't do complete sandboxing, it just sets up an environment (obviously) and changes sys.path. And GAE SDK does this too, they both intefere, SDK is being developing rapidly and changing often, so this is extremely bumpy road to go.
Probably, it would be better if you'd explain what are you trying to achieve. My guess is that you're trying to create a clean environment to ensure that no 3rd-party module is available to application. If this guess is correct, I'd go with installing GAE SDK into virtualenv via requirements files as described here.